Citi raises Geberit stock target to CHF600, keeps neutral rating

Published 13/05/2025, 09:18
Citi raises Geberit stock target to CHF600, keeps neutral rating

On Tuesday, Citi analysts, led by Ephrem Ravi, adjusted their outlook on Geberit AG (SIX:GEBN:SW) (OTC: GBERY), a leading provider of sanitary products, by increasing the price target from CHF555.00 to CHF600.00 while maintaining a Neutral rating on the stock. The revision reflects the anticipation of Geberit benefiting from a gradual recovery in the European construction sector, which is expected to start this year. The optimism appears justified, as InvestingPro data shows the stock has already gained over 23% year-to-date, with impressive gross profit margins of 73%.

The updated Citi report indicates that with around 90% of its revenue stemming from Europe and about 30% from Germany specifically, Geberit is well-positioned to capitalize on the improving construction landscape in Europe. Analysts project approximately 4% volume growth for Geberit in their 2025 estimates. Despite the positive outlook on the company’s growth prospects and a strong track record of maintaining dividend payments for 26 consecutive years, Citi analysts have decided to maintain a Neutral stance due to valuation concerns. This caution aligns with InvestingPro’s Fair Value assessment, which suggests the stock is currently overvalued.

The analysts noted that Geberit’s stock is trading at a rich valuation, approximately 22 times the 2025 estimated EV/EBITDA, which is higher than both its long-term historical average of 20 times and its peers, which typically range between 7 and 12 times. This valuation suggests limited upside potential for the stock, according to Citi’s assessment.

The coverage transfer from Nitesh Agarwal to Ephrem Ravi was also mentioned in the report. The new price target represents an increase from the previous target but does not alter the overall neutral sentiment towards Geberit’s stock. The analysts’ comments indicate a recognition of Geberit’s potential growth driven by the sector’s recovery but also a cautious approach due to the current valuation levels.

In other recent news, Geberit AG has seen an upgrade in its stock rating by CFRA analyst Lee Zhao Jun, moving from Hold to Buy. This change comes with an increased price target from CHF550.00 to CHF680.00, reflecting a positive outlook on the European construction market’s potential recovery. Geberit’s net sales for 2024 have grown by 2.5% year-over-year to CHF3.1 billion, despite negative currency effects of CHF76 million, driven by increased volumes and strong performance of new products. The analyst’s decision is supported by an expected valuation recovery for Geberit in 2025, even though there is no earnings guidance and a slight decline is anticipated in the new building construction industry.

A stable to slightly positive trend is foreseen in the renovation market due to interest rate changes in Europe and a shift towards higher sanitary standards. Geberit’s resilient pricing power is expected to counterbalance the forecasted flat demand, and a share buyback program of up to CHF300 million is anticipated to help stabilize the stock price amid expected revenue declines in markets like Germany and Sweden. The upgrade is based on a 2025 EV/EBITDA multiple of 25x, slightly higher than Geberit’s five-year average of 20.4x, justified by potential recovery and growth. CFRA maintains its EPS estimates for Geberit at CHF18.40 for 2025 and CHF20.00 for 2026, indicating confidence in the company’s financial prospects.

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